John, thank you, and good morning. And I would note that I was just as enthusiastic when you came to me many years ago about this concept of a Shangri-La Dialogue as I am today. And I think, John, it has developed into a platform, a venue, a bridge, an opportunity, to go beyond even what you had envisioned when we first discussed this in 1999 and 2000. So I’m very proud of my career association with your conference.

I want to also recognize and thank the International Institute for Strategic Studies for its continued support of this effort, as well as other efforts across the globe, as they convene, on a continuous and very relevant way, these important opportunities to exchange ideas, and have an opportunity to go deeper down into the great challenges and opportunities of our time.

I want to thank Prime Minister Lee here in Singapore and Defense Minister Ng for their always warm hospitality, for the government of Singapore, the people of Singapore, for their continued support of this effort, and also Singapore’s leadership in this region and beyond.

I would also like to recognize a good friend, a former colleague in the United States Senate, Senator Ben Cardin, who is here with us today. Senator Cardin is Chairman of the Senate Foreign Relations Subcommittee on East Asia and Pacific Affairs. Ben, we’re glad to have you here and we appreciate your active participation.

Also, I want to acknowledge our United States Ambassador for Singapore, Ambassador Kirk Wagar, who is here, and for his efforts, and his team’s good work in our embassy. Ambassadors are important in the region, as everyone in this region, this room knows, and they do an exceptionally effective job representing the United States. So Kirk, tell all of your people how much we value their work and appreciate it.

A couple of others of particular note, certainly for me, I want to mention. Here in the front row is the Chairman of the Joint Chiefs of Staff, General Martin Dempsey. Marty, great to have you with us here today. Sitting behind General Dempsey is a familiar face to all of us, all of you here – Admiral Sam Locklear, who is the commander of our Pacific Command, who travels these waters and these ways on a daily basis. And Sam, for what you do, and your team, we appreciate very much.

And one other person in particular I want to note, is a good friend, longtime friend, former United States Senator, and a predecessor of mine who was a very effective Secretary of Defense, Bill Cohen, who is in the audience. Bill, always good to have you here, and thank you for what you continue to contribute to world affairs.

Last year, I participated in this dialogue during my first visit to the Asia-Pacific as Secretary of Defense. As John noted, as a United States Senator I have been here many times. I spoke about the United States of America’s firm commitment – firm commitment to this region’s security and economic prosperity, and to supporting its extraordinary progress through our strategic rebalance.

Today, I return on my fifth trip to the region as Secretary of Defense in about a year, again reaffirming that America’s commitment to the Asia-Pacific is enduring.

In his remarks at West Point earlier this week, President Obama laid out the next phase of America’s foreign policy – particularly as we come out of 13 years of war in Iraq and Afghanistan. He made clear we will balance our diplomacy, our development assistance, and military capabilities, and that we will strengthen our global partnerships and alliances.

That is how America is implementing its strategy of rebalancing to the Asia-Pacific.

The rebalance is not a goal, not a promise, or a vision – it’s a reality. Over the last year, President Obama launched comprehensive partnerships with Vietnam and Malaysia, held a summit with Chinese President Xi, and last month visited three of our five regional treaty allies – Japan, South Korea, and the Philippines – as well as Malaysia. In the Philippines, he and President Aquino announced a new Enhanced Defense Cooperation Agreement on the rotational presence of U.S. forces – the most significant milestone for our alliance in over a decade.

Under President Obama’s leadership, the administration is also making progress in negotiating the Trans-Pacific Partnership trade agreement. Our State Department is increasing foreign assistance funding to the Asia-Pacific region and expanding assistance for maritime capacity-building in Southeast Asia

Diplomatic, economic, and development initiatives are central to the rebalance, and to our commitment to help build and ensure a stable and prosperous region. But prosperity is inseparable from security, and the Department of Defense will continue to play a critical role in the rebalance – even as we navigate a challenging fiscal landscape at home.

A central premise of America’s strategy in the Asia-Pacific is our recognition that, in the 21st century, no region holds more potential for growth, development, and prosperity than this one.

But even while advances in human rights, freedom, democracy, technology, and education are all yielding better lives and futures for all people; and even as more nations are stepping forward to contribute to regional security, the Asia-Pacific is also confronting serious threats.

We see ongoing territorial and maritime disputes in the South and East China Seas; North Korea’s provocative behavior and its nuclear weapons and missile programs; the long-term challenge of climate change and natural disasters; and the destructive and destabilizing power of cyber attacks.

Continued progress throughout the Asia-Pacific is achievable, but hardly inevitable. The security and prosperity we have enjoyed for decades cannot be assured unless all nations – all our nations – have the wisdom, the vision, and will to work together to address these challenges.

As President Obama said earlier this week, “America must always lead on the world stage. If we don’t, no one else will.” He went on to say that, the “question is not whether America will lead, but how we will lead…to help ensure peace and prosperity around the globe.” Today, I want to highlight four broad security priorities that the United States, as a Pacific power, is advancing in partnership with friends and allies throughout the Asia-Pacific:

First, encouraging the peaceful resolution of disputes; upholding principles including the freedom of navigation; and standing firm against coercion, intimidation, and aggression;

Second, building a cooperative regional architecture based on international rules and norms;

Third, enhancing the capabilities of our allies and partners to provide security for themselves and the region; and,

Fourth, strengthening our own regional defense capabilities.

One of the most critical tests facing the region is whether nations will choose to resolve disputes through diplomacy and well-established international rules and norms…or through intimidation and coercion. Nowhere is this more evident than in the South China Sea, the beating heart of the Asia-Pacific and a crossroads for the global economy.

China has called the South China Sea “a sea of peace, friendship, and cooperation.” And that’s what it should be.

But in recent months, China has undertaken destabilizing, unilateral actions asserting its claims in the South China Sea. It has restricted access to Scarborough Reef, put pressure on the long-standing Philippine presence at the Second Thomas Shoal, begun land reclamation activities at multiple locations, and moved an oil rig into disputed waters near the Paracel Islands.

The United States has been clear and consistent. We take no position on competing territorial claims. But we firmly oppose any nation’s use of intimidation, coercion, or the threat of force to assert those claims.

We also oppose any effort – by any nation – to restrict overflight or freedom of navigation – whether from military or civilian vessels, from countries big or small. The United States will not look the other way when fundamental principles of the international order are being challenged.

We will uphold those principles. We made clear last November that the U.S. military would not abide by China’s unilateral declaration of an Air Defense Identification Zone in the East China Sea, including over the Japanese-administered Senkaku Islands. And as President Obama clearly stated in Japan last month, the Senkaku Islands are under the mutual defense treaty with Japan.

All nations of the region, including China, have a choice: to unite, and recommit to a stable regional order, or to walk away from that commitment and risk the peace and security that have benefitted millions of people throughout the Asia-Pacific, and billions around the world.

The United States will support efforts by any nation to lower tensions and peacefully resolve disputes in accordance with international law.

We all know that cooperation is possible. Last month, 21 nations signed the Code for Unplanned Encounters at Sea – an important naval safety protocol. ASEAN and China are negotiating a Code of Conduct for the South China Sea – and the United States encourages its early conclusion. Nations of the region have also agreed to joint energy exploration; this month, the Philippines and Indonesia resolved a longstanding maritime boundary dispute; and this week, Taiwan and the Philippines agreed to sign a new fisheries agreement.

China, too, has agreed to third-party dispute resolution in the World Trade Organization; peacefully resolved a maritime boundary dispute with Vietnam in 2000; and signed ASEAN’s Treaty of Amity and Cooperation.

For all our nations, the choices are clear, and the stakes are high. These stakes are not just about the sovereignty of rocky shoals and island reefs, or even the natural resources that surround them and lie beneath them. They are about sustaining the Asia-Pacific’s rules-based order, which has enabled the people of this region to strengthen their security, allowing for progress and prosperity. That is the order the United States – working with our partners and allies – that is the order that has helped underwrite since the end of World War II. And it is the order we will continue to support – around the world, and here in the Asia-Pacific.

This rules-based order requires a strong, cooperative regional security architecture.

Over the last year, the United States has worked with Asia-Pacific nations to strengthen regional institutions like ASEAN and the ADMM+, which I attended last year in Brunei.

This regional architecture is helping to develop shared solutions to shared challenges, building strong and enduring ASEAN security community, and ensuring that collective, multilateral operations are the norm, rather than the exception.

To make further progress, our militaries must train, plan, and operate side-by-side – as we did after Typhoon Haiyan, and in the search for Malaysian Airlines Flight 370.

Both these tragedies – different as they were – showed that all nations of the region can work together to provide rapid humanitarian assistance and disaster relief. They also demonstrated that the need for facilities and agreements that are ready and in-place when disaster strikes, so that relief can flow as soon as it is needed. For these missions, ASEAN members should consider Singapore’s offer to use Changi Naval Base as another regional command and control hub. Some 80% of the world’s large-scale natural disasters strike in the Pacific, and with climate change threatening even more severe weather, closer cooperation cannot wait.

This was one of the topics discussed at the recent U.S.-ASEAN Defense Forum I hosted a couple of months ago in Hawaii – an initiative that I suggested on this platform at this Dialogue last year.

Over the course of that three-day forum, my discussions with ASEAN defense ministers highlighted a clear and shared interest in building a common understanding of the regional security environment, including more information-sharing, greater maritime cooperation, and more joint and combined exercises.

A common picture of the region’s maritime space could help deter provocative conduct, and reduce the risk of accidents and miscalculation. So I am asking Admiral Sam Locklear, who leads the United States Pacific Command, to host his regional counterparts to discuss concrete ways to establish greater maritime security awareness and coordination.

The United States is also reaching out to China. We’re reaching out to China because we seek to expand prosperity and security for all nations of this region.

As I underscored in Beijing last month during my visit to China, the United States will continue to advance President Obama and President Xi’s shared commitment to develop a new model of relations – a model that builds cooperation, manages competition, and avoids rivalry. To help develop this model, we are increasing our military-to-military engagement with China through our joint exercises, exchanges, and other confidence-building measures that can help improve communication and build understanding between our forces. Chairman of the Joint Chiefs General Dempsey and I have led this effort, and we will continue to focus on building this new military-to-military model. And I am glad General Dempsey is here to help us today accomplish more progress in this area.

We must also work more closely together to guard against North Korea’s destabilizing provocations, and its nuclear and ballistic missile programs, which threaten regional stability and China’s own interests. The United States is looking to China to play a more active and constructive role in meeting this challenge and achieving complete, verifiable, and irreversible denuclearization of the Korean Peninsula.

The U.S.-China military-to-military dialogue has a long way to go. But I think we’ve been encouraged by the progress we’ve made, and continue to make. Our dialogue is becoming more direct, more constructive…getting at the real issues and delivering more results.

As we expand this dialogue, the United States also supports a sustained and substantive exchange with China on cyber issues. Although China has announced a suspension of the U.S.-China Cyber Working Group, we will continue to raise cyber issues with our Chinese counterparts, because dialogue is essential for reducing the risk of miscalculation and escalation in cyberspace.

As America strengthens its ties across the Asia-Pacific, we also welcome the region’s democratic development. We welcome democratic development because democracies are America’s closest friends, and because democracies are much more likely to live with their neighbors in peace.

The United States will continue to strongly support our friends who are pursuing democratic development – in Myanmar and elsewhere around the region. We will also respond when nations retreat from democracy, as in Thailand. We urge the Royal Thai Armed Forces to release those who have been detained, end restrictions on free expression, and move immediately to restore power to the people of Thailand, through free and fair elections. Until that happens, as U.S. law requires, the Department of Defense is suspending and reconsidering U.S. military assistance and engagements with Bangkok.

The Asia-Pacific’s shifting security landscape makes America’s partnerships and alliances indispensable as anchors for regional stability. As we work to build a cooperative regional architecture, we are also modernizing our alliances, helping allies and partners develop new and advanced capabilities, and encouraging them to work more closely together.

In Southeast Asia, that means continuing to help nations build their humanitarian and disaster relief capabilities, and upgrade their militaries. One important example is our first-ever sale of Apache helicopters to Indonesia, which I announced during my visit to Jakarta last year. This sale will help the Indonesian Army defend its borders, conduct counter-piracy operations, and control the free flow of shipping through the Straits of Malacca. We are also providing robust assistance to the Philippines’ armed forces, to strengthen their maritime and aviation capabilities.

Two months ago, we signed an agreement with the Republic of Korea. We signed that agreement for its purchase of Global Hawk, which will dramatically enhance its intelligence, surveillance, and reconnaissance capabilities. South Korea also intends to acquire the F-35 Joint Strike Fighter – which means that America and its most capable allies in this region, including Australia and Japan, will soon be operating the world’s most advanced, fifth-generation tactical aircraft.

We are also making significant progress in building a robust regional missile defense system. Last month in Tokyo, I announced that the United States will deploy two additional ballistic missile defense ships to Japan – a step that builds on the construction of a second missile defense radar site in Japan, and the expansion of America’s ground-based interceptors in the continental United States, which I reviewed this week in Alaska during my trip to Singapore.

Modernizing our alliances also means strengthening the ties between America’s allies, enhancing their joint capabilities – such as missile defense – and encouraging them to become security providers themselves. Yesterday, I held a trilateral meeting with my counterparts from Australia and Japan, and today I will host another trilateral meeting with my counterparts from Korea and Japan.

The enhanced cooperation America is pursuing with these close allies comes at a time when each of them is choosing to expand their roles in providing security around the Asia-Pacific region, including in Southeast Asia. Seven decades after World War II, the United States welcomes this development. We support South Korea’s more active participation in maritime security, peacekeeping, and stabilization operations. We also support Japan’s new efforts – as Prime Minister Abe described very well last night – to reorient its Collective Self Defense posture toward actively helping build a peaceful and resilient regional order.

To complement these efforts, the United States and Japan have begun revising our defense guidelines for our first time in more than two decades. We will ensure that our alliance evolves to reflect the shifting security environment, and the growing capabilities of Japan’s Self-Defense Forces.

America’s global partnerships also reach across the Asian continent and extend to India, one of the United States’ most important, democratic partners – and a country with historic influence across Asia.

The United States looks forward to working with India’s new government led by Prime Minister Modi. We welcome India’s increasingly active role in Asia’s regional institutions, which strengthens regional order. We also welcome India’s growing defense capabilities and its commitment to freedom of navigation in the Indian Ocean. To further strengthen U.S.-India defense ties, I am directing the Pentagon’s Undersecretary for Acquisition, Technology, and Logistics to lead the U.S.-India Defense Trade and Technology Initiative with India’s new government. I plan to play an active and very personal role in expanding this initiative because it is a centerpiece of America’s defense cooperation with India, and it should reflect the trust and confidence President Obama and I have in our nation’s relationship with India. To reinforce this effort – and to drive even more transformational cooperation – I hope to visit India later this year.

The United States also remains committed to building the capacity of allies and partners in the region through as many as 130 exercises and engagements, and approximately 700 port visits annually. And across the Asia-Pacific region, as part of the rebalance, the United States is planning to increase Foreign Military Financing by 35%, and military education and training by 40% by 2016.

Next month, the United States will host its annual Rim of the Pacific exercise, the world’s largest maritime exercise that will feature for the first time a port visit by a New Zealand naval ship to Pearl Harbor in more than 30 years, and it will include Chinese ships for the first time. All told, RIMPAC will include some 23 nations, 49 surface ships, 6 submarines, more than 200 aircraft, 25,000 personnel, and even, I understand, a few highly trained sea lions.

Beyond capacity-building efforts, a stable and peaceful regional order depends on a strong American military presence across the Asia-Pacific region… a presence that enables us to partner with our friends and allies, and help deter aggression. We are no strangers to this part of the world. America has been a Pacific power for many years. Our interests lie in these partnerships and this region.

Today, America has more peacetime military engagement in the Asia-Pacific than ever before. I want to repeat: today, America has more peacetime military engagement in the Asia-Pacific than ever before. And America’s strong military presence – and our role in underwriting the region’s security – will endure. Our friends and allies can judge us on nearly seven decades of commitment and history of commitment. That history makes clear, America keeps its word.

America’s treaty alliances remain the backbone of our presence in the Asia-Pacific, and our friends and allies have seen our significant steps in recent years to enhance our posture in Northeast Asia, to expand our partnerships in Southeast Asia, and to ensure our forces can operate effectively regardless of other nations’ capabilities.

Consider that just three years ago, the strength of our alliance with Japan was being overshadowed by disagreements over the future of the U.S. presence in Okinawa.

Today, we have a fully agreed force realignment roadmap, and we achieved a major breakthrough last December with the approval of the permit to build the Futenma Replacement Facility. We have also deployed our most advanced capabilities to Japan – including two Global Hawks at Misawa, F-22 fighter aircraft at Kadena, and MV-22 Ospreys on Okinawa.

Meanwhile, we are enhancing our posture on the Korean Peninsula and sustaining the readiness of our forces. To reflect a dynamic security environment, including the evolving North Korean nuclear and missile threat, the U.S. and South Korea decided we can reconsider the current timeline for the transition of wartime operational control to a Seoul-led defense in 2015. We have enhanced the U.S. Army’s force posture and deployed even more advanced intelligence, surveillance, and reconnaissance capabilities. And we recently reached a new Special Measures Agreement that codifies our shared resource commitment to defending the peninsula.

Further south, we have strengthened our partnership and alliance with Australia. Three years ago, we had no forces operating in Australia. Today, we have more than 1,000 Marines rotationally deployed in Darwin. With Australian troops, these Marines will conduct training and exercises throughout the region.

In the coming years, the United States will increase its advanced capabilities that are forward-stationed and forward-deployed in the entire region, particularly as we draw down our forces in Afghanistan. And we will ensure that we sustain our freedom of action in the face of disruptive new military technologies.

Next year, the Navy will introduce the Joint High Speed Vessel in the Pacific and an additional submarine forward-stationed in Guam. As many as four Littoral Combat Ships will be deployed here by 2017. By 2018, the Navy’s advanced, multi-mission Zumwalt-class destroyer will begin operating out of the Pacific. And by 2020, as we achieve our target of operating 60% of both our Navy and Air Force fleets out of the Pacific, we will also be flying the Hawkeye early warning and unmanned Triton ISR aircraft in the region.

Because U.S. force posture in Asia is a priority for DoD, I am directing our Deputy Secretary of Defense to oversee the implementation of our ongoing enhancements to America’s military presence in this region, and with particular emphasis on our posture in Japan, Korea, and Guam. The Deputy Secretary will also continuously review the posture of our forces, to ensure they remain prepared for all necessary contingencies.

Finally, to ensure that the rebalance is fully implemented, both President Obama and I remain committed to ensuring that any reductions in U.S. defense spending do not come – do not come – at the expense of America’s commitments in the Asia-Pacific.

Here, and around the world, a peaceful, prosperous, and durable order will not sustain itself. The nations of the Asia-Pacific must come together to accomplish this.

We must support the peaceful resolution of disputes…and oppose intimidation and coercion no matter where they are.

We must build a cooperative regional security architecture that builds trust and confidence.

And we must continue to develop, share, and maintain advanced military capabilities that can adapt to rapidly growing challenges.

From Europe to Asia, America has led this effort for nearly seven decades, and we are committed to maintaining our leadership in the 21st century.

Later this morning, I will meet with Vietnamese General Thanh. General Thanh joined the Vietnamese army in 1967, the same year I joined the United States Army and arrived in Vietnam. Today, General Thanh and I will meet as America’s Secretary of Defense and Vietnam’s Minister of Defense…working to strengthen our nations’ emerging defense ties. History is full of irony, which is why America must lead and will continue to lead with humility.

But America must lead, and our leadership must always reflect an enduring truth: As United States Secretary of State, Secretary of Defense, and General George Marshall once said, “the strength of a nation does not depend alone on its armies, ships, and planes…[but] is also measured by…the strength of its friends and [its] allies.” Very wise words from General Marshall. Those words ring more true today than ever before.

Today, perhaps more than ever, one of America’s greatest sources of strength is its network of partners and allies. As President Obama put it at his West Point speech, from Europe to Asia, America is “the hub of alliances unrivalled in … history of nations.”

Across this region, and across the globe, the United States has been – and always will be – committed to a peaceful and prosperous international order that rests not merely on America’s own might, but on our enduring unity and partnership with other nations.

This Regional Security Assessment 2014 is the first IISS Strategic Dossier to be issued in association with the Shangri-La Dialogue. It focuses on issues reflecting the most important themes to emerge from successive Dialogues.